Convicted securities fraud exec may get gun rights back

Reyes was indicted in 2006 by the U.S. Securities and Exchange Commission and, since compeleting an 18 month sentence in federal prison in 2011, was told that his history of being convicted bars him from a legal firearm sale (Photo: SEC)

A federal judge has sided with the former CEO of a tech company who argues a ban on felons possessing guns should not apply to his white-collar crime.

Gregory Reyes, the first person convicted for fraudulent backdating corporate stock options, was convicted of violations of the Securities Exchange Act in 2010 and sentenced to 18 months in prison.

In 2017, he challenged the resulting ban on legal firearms possession that stemmed from the conviction, arguing the prohibition over his business-related crimes is not required by the law, and last week a judge in a District of Columbia federal court agreed.

Under federal law, those found guilty of non-domestic violence-related crimes punishable by imprisonment for over a year can lose their gun rights. However, pointing out that the Securities Exchange Act “was primarily intended to prevent economic harm to investors” in the wake of the stock market crash of 1929, U.S. District Judge John D. Bates said in a memo on Friday that Reyes’ conviction did not meet the standard of a “crime punishable by imprisonment for a term exceeding one year” as federal statute excludes crimes relating to the regulation of business practices.

Accordingly, Bates denied a motion by the Justice Department to dismiss Reyes’ lawsuit and set an Oct. 12 deadline for both sides to inform the Court if final relief should be granted in favor of the former executive.

The former CEO of Brocade Communications, Reyes was indicted in 2006 on a series of conspiracy and fraud charges that eventually ended with 18 months in prison and a $15 million fine and well as settlements with the Securities and Exchange Commission.

Following his release in 2011, Reyes completed his probation and not been charged with another crime. However, he sought to buy a handgun with two different firearms vendors last year and was told that his history of being convicted bars him from a legal sale.